Apple’s ‘secret’ trading tip and wasting time with Warren Buffett

By Shawn Langlois

Still no deal. A couple of grim tech forecasts. Fitch moving closer to downgrading U.S. debt.

There’s plenty out there to be jumpy about, but investors are hardly listening anymore. They seem to have a singular focus on being properly positioned for a resolution.

After yesterday’s market hiccup, the buyers are back at it this morning, clearly banking on the elusive deal. You know, the one that is so obviously a foregone conclusion. The one that will forever unite our fabulous leaders, propel us into a new era of bipartisan kumbaya and render all the other negative economic stuff inconsequential. Warren Buffett was on CNBC this morning saying the debt limit is a ‘political weapon of mass destruction,” but also no reason not to invest. Putting his money where his mouth is, Berkshire Hathaway shelled out $1.1 billion for a U.K. drinks business this morning.

Reminds me of that Larry David quote: “Hear the birds? Sometimes I like to pretend that I’m deaf, and I try to imagine what it’s like not to be able to hear them. It’s not that bad.” Yes, sometimes it pays to ignore the noise. Today seems to be one of those times. Until you wake up with default splattered all over your windshield.

The economy:Two pieces of information coming out today, though nothing like what investors are still wanting to see, real data on the economy. A home builder’s index is due out at 10 a.m. Eastern and the Fed’s Beige Book will be released at 2 p.m. Here’s a preview.

The shutdown: Otherwise, nothing to see here. More of the same mind-numbing ridiculousness. And the clock keeps ticking. Senate leaders will reconvene at noon Eastern.

What kind of gift am I supposed to buy for Day 15 of the shutdown? Is that Bronze?

The buzz: Chalk one up for the Big Board. Twitter is heading to the NYSE rather than the Nasdaq. Not that anybody cares about whether hot tech IPOs make money; but for what it’s worth, Twitter shed almost $65 million in the third quarter.

But Apple’s latest hire is drawing mostly rave reviews. Then again, its diehard fans rarely venture into critical. Here’s a good piece from Fast Company on Angela Ahrendts’s view of the future of retail. Unfortunately, she might have trouble getting a corner office in the new headquarters.

Working in banking in London might help pay those gouging South Kensington rents, but there’s a bigger cost involved. First, the tragic story of a dead intern at Bank of America, and now a top executive can’t handle the heat and is bailing on Barclays
/quotes/zigman/301787UK:BARC.

The chart of the day: J.C. Parets of the All Star Charts blog is catching some flack for his stance that owning Berkshire Hathaway simply isn’t worth it. But he makes a good point with this chart. The correlation to the broad market has been virtually identical. “Don’t waste your time investing in a closet indexer,” he wrote. “All you’re really doing is adding exposure, volatility and risk to your portfolio.”

All Star Charts

The call of the day: Buy Apple
/quotes/zigman/68270/quotes/nls/aaplAAPL on the close and sell it on the open. Over and over again. Of course, past results aren’t a guarantee of future returns, but this approach so far this year has yielded dramatic results. In fact, Mike Harris of the Price Action Lab blog calls it “one of the best-kept secrets on Wall Street.” The numbers, as he presents them, are startling. If you just held the stock since the beginning of the year, you’d have lost about 5%, when adjusted for dividends. With his approach, you’d have netted a whopping 14% return, not including fees.

This chart shows the degree of outperformance. The red line is what you’ll get if you follow the “buy at close/sell at open” approach. The black line is the net performance of the stock. The green line is what happens to the stock just intraday.

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Need to Know (NTK) guides investors to the most important, insightful items required to chart a course ahead of each trading day. Anchored by lead writer Shawn Langlois, NTK will sift through the fire hose of news, commentary and data, from traditional and non-traditional sources, and extract what’s most essential. You can start reading NTK here as it begins publishing at approximately 6:30 a.m. ET, or sign up here to get a version in your email box every morning at approximately 8:45. a.m. ET.